Are you a doctor who is selling your medical practice and ready to say ‘goodbye’ to running your own medical clinic? Leaving the business, smoothly, may not be as easy as you hope, says medical accounting expert Kym Nitschke.
You went into debt and studied for years. You learned how to run a business and built up a strong patient base. You sharpened your professional skills, carved out a niche for yourself in the medical community and worked very long and hard.
Now, after years of sweat you’re ready to retire. Perhaps you’d like to keep practicing, but you’re ready to pass on the burden of running the business.
Whatever your motivation may be, you’re considering selling your medical practice.
You should know, however, that selling your medical practice can be just as time-consuming and complicated as buying one. What’s more, the market for selling existing medical practices is already heavily saturated, in some markets. You may have a hard time getting others to even notice that your business is for sale.
Consider the following seven points before you begin the selling process to help you sell your practice as quickly as possible.
1. You need to stay focused on your reasons for selling
Selling a medical practice can feel like an intimidating task once you begin the process. Going through the steps to market your business, complete the sale and transition ownership takes effort. To avoid getting discouraged, you need to set a concrete goal. After weighing the pros and cons of selling and convincing yourself of the benefits, focus on those to help you stay committed to your goal.
2. You can expect the selling process to take a few years
Selling doesn’t happen overnight! Depending on the demand in the market and the size of your medical practice, a sale can happen within a few months or it can take more than two years.
As a rule of thumb, start planning your exit strategy several years before you intend to actually sell. This way, you won’t be so overwhelmed by the multitude of tasks you must complete.
3. You’ll have to get the business of your practice in order
As a medical professional who takes their patient obligations seriously, you’ve been primarily focused on your trade as physician. But come sale time, you need to switch gears and focus on the financial aspect of your business.
Your practice’s financial performance is what will drive most of the sale. Prospective buyers will be looking at your clinic’s revenue and want to see that it is growing.
It’s extremely important to have tidy paperwork and records dating back at least three years which can prove the success of your business. This is another factor which can add time to your sale process; if your practice’s finances aren’t in order, then it can take a long time to clean them up.
4. Plan to market to a wider audience than you expect
You may already have in mind what kind of medical or business professionals may be interested in purchasing your practice. But you shouldn’t limit yourself to marketing to a narrow profile of buyers. The person who ends up paying top dollar for your practice may be someone you didn’t expect. That’s why it’s good to spread the news of your sale into as many markets as possible.
5. Keep your sale plans as quiet as possible to avoid compromising a sale
The fewer people who know about your business sale, the better. Those who are shopping around to buy a practice will know where to look. If you keep your sale on discreet online marketing websites or leave your marketing to the right broker, then you’ll have nothing to worry about. If you advertise widely in the open or talk about your sale plans around your staff, then the public knowledge can compromises sale proceedings.
Your current medical staff may become worried about losing their jobs and leave your team if they find out about the sale and this can negatively impact your business during the last critical months. Or your competitors may find out and change up their marketing strategy in a way that impacts your current sales.
Your sale plans should be kept under wraps until the last possible moment when all the details are finalised.
6. Know what your business is worth both to you and to a prospective buyer
Now comes the big question: what price should you ask for your medical practice?
Determining your final price requires careful thought. Too high and you won’t find any buyers. Too low and you can end up losing money. You need to figure out the fair market value for your practice so that everyone wins.
The fair market price depends on your current revenue, projects and the practice’s assets. Does the sale include specialist equipment that you paid a lot of money for? Such assets need to be carefully calculated. In addition to those tangible assets, you’ll also want to factor in the value of those that aren’t so easy to calculate.
‘Goodwill’ is the part of your business that adds to its value but that doesn’t have a concrete price. Goodwill assets include things like:
– List of patients, particularly if you have a large and loyal base
– A well-known and respected name or brand in the community
– A well-trained team of medical staff
– A system of successful and efficient office processes
– Convenient parking and easy access to your practice
It takes time to determine how much these aspects contribute to the value of your practice. You must also consider how much a buyer would be willing to pay for these advantages.
7. You will need professional help with negotiating the sale
You probably didn’t start up your practice without help and you won’t be able to sell it without professional help, either.
A potential buyer will have strong emotions connected to their purchasing commitment and likewise you may have an emotional involvement in the sale of your practice. You both want the sale to get over with as quickly as possible while saving money in process. You and your buyer alike will thus need an unbiased mediator who can ensure a fair and calm negotiation process.
Don’t assume you can handle selling on your own even if you have successfully run a business for years. You’ll still need the current and pertinent advice that only expert medical accountants and business advisers can provide.
Contact Nitschke Nancarrow, experts in all aspects of medical accounting, finance and business. Managing partner Kym Nitschke is available for a free initial discussion about your situation. Call us on (08) 8379 9950 or send me an email.
– Kym Nitschke
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.Tags: medical practice, selling your medical practice